Divorce Finances Survival in the Paycheck Crunch

 

Posted by Divorce Network, February 2010

Divorce brings many life-altering changes to everyone involved.  One of the first changes that most people notice is that divorce and finances aren’t the best of friends. When you have one, you don’t have the other!  Learning how to navigate this all-important change can make the difference between success and failure. Changing your spending habits to accommodate your newly-reduced income might need to be the first change you acknowledge and adapt to.  Now is the time to develop a sound plan for your after divorce finances that might include downsizing your living arrangements, establishing your own individual financial presence, and learning to invest and save for the future.

Obviously, one of the first financial expenditures that most divorcees have to deal with is their living arrangements.  Although, for the custodial parent, there might be a need to retain the space provided by the family home, maintaining the expenses involved in running a sizeable household might not be possible.  For this reason, it's important to reevaluate your need for, and your ability to afford your house.  Many couples find that it becomes necessary to sell marital real estate and move into smaller digs in order to stay financial stable.  Some individuals, even those with children, may even have to rough it in an apartment for a while until they have adjusted to the divorce and finances are becoming more reliable.

Yet, downsizing from the family home is often the hardest move for recent divorcees to make.  Many parents worry about the effect moving will have on their children and sometimes just find it sincerely difficult to give up the memories and the security that the family home has signified.  Rest assured, for most people, downsizing actually ends up being a relief, both emotionally and financially.  And, although it's always advisable to keep children in the family home whenever possible, stability is more important than residence.  Take stock of what you really need.  Children adjust, and you will too.

After determining how much house or apartment you can afford, you'll need to develop a budget that fits your post divorce finances.  Things like the morning latte might become a luxury of days past, but there are tricks that can make this new adventure not only possible, but fun.  Many recent divorcees cite using coupons, making and packing meals at home rather than eating out, and scaling back on clothing and entertainment budgets as lifesaving financial moves.  
Can’t live without your coffee fix in the morning – no problem; invest in a coffee or espresso maker and start making your morning latte at home.  You can save hundreds every year by finding new and cost effective alternatives.  Even Tyra Banks admitted on her show that she takes advantage of the punch card discounts available at coffee houses and restaurants because she appreciates a good value.  If it's good enough for Tyra, it'll work for you too!

In extreme downsizing situations, there may be many things you'll need to do without.  The good news is that, many times, this is a temporary setback.  You’ve had to adjust to life after divorce and finances is one of the largest adjustments.  Many people learn to do without and find themselves none the worse for the wear.  Others learn to increase their income so they can eventually incorporate some sacrificed luxuries back into the budget.  

Going from two paychecks to one does not always have to be as traumatic as it sounds.  For divorcees with children, enlist them in developing a new budget and teach them financial values by teaching them to save.  Helping children compare pennies to possessions will make them wise consumers. Additionally, it may help your children feel some sense of control over a situation that often leaves some feeling helpless.